The new Labour government has indicated that new rules will be introduced soon, limiting the use of zero-hour contracts. Although the party’s stance has moved away from banning this type of contract altogether, restrictions on zero-hour contracts could affect many UK businesses.
Digital staffing platform Coople have analysed the potential impact of this change, particularly to businesses in hospitality and logistics. Coople’s prediction is that businesses will still be able to offer zero-hour contracts as long as they also offer candidates a contract with set hours. Labour now says only “exploitative zero-hours contracts” will be banned, as opposed to an outright ban.
“All companies who rely on workers on zero-hour contracts should pay close attention to the coming changes,” said John Dawson, Vice President of Customer Success at Coople. “It may be that businesses will have to find new ways of working in order to remain compliant with UK employment law.
“Although zero-hours contracts may no longer be as common in the future, there is still definitely an appetite for flexible work – in the UK, we have more than 400,000 talented, skilled Cooplers who are looking for temporary or flexible positions.”
Hospitality
This industry relies greatly on zero-hours staff. According to data from the Office for National Statistics, in January-March 2024, nearly a third of those whose work was categorised as ‘Accommodation and Food’ were on zero-hours contracts, at 27%.
Hospitality is an industry with many student workers, who choose to work flexibly alongside their studies. Business leaders in the hospitality sector were among those most opposed to plans to outright ban zero-hours contracts. They said it was important to be able to quickly onboard temporary workers during busy periods, especially when their businesses are affected by seasonal demand.
Logistics
Logistics is another industry that Coople highlighted as being particularly reliant on zero-hours workers, especially at peak times of the year such as the run up to Christmas. A key factor that affects staffing in this industry is the need for workers who are able to work night shifts. Data from the Office for National Statistics shows that only 23% of the labour force work at night at least some of the time. This number is falling: it dropped from 9.5 million workers in 2016 to 8.7 million in 2022.
Predictions
If zero-hours contracts are restricted, UK businesses may need to find alternative ways to manage staffing, particularly when both the business and the worker would prefer a degree of flexibility in the contract.
The UK may find itself following the example of countries like Germany, where employers must offer a minimum number of hours per day or week.
Several models for flexible contracts have been suggested by research groups, including contracts that offer a set number of hours, spread out over a year or a month rather than a week. This would still allow for hours to vary, while offering guaranteed hours for the worker.
The government’s Employment Rights Bill is likely to introduce changes to laws around zero-hours contracts in the months and years to come, although it is as yet uncertain exactly what these changes will be. Coople advises all UK employers to be mindful that laws may be changing, and reminds them to be ready to adapt their policies to make sure they remain compliant.
